Settling CC on your own instead of BK

[paradiddle]

What is not the norm? Might be my norm...

Not Normal: (1) I have a pending insurance settlement that would be taken in a BK 13. (also the $$$ would be used to payoff the unsecured debt and not on a discount). (2) Our home 1st mortgage is really close to to current value, hence we would not qualify for a lien strip of our 2nd mtg HELOC. (3) we are ok budget wise after the settlement. We had no other loans. All debt was in my name only and my wife was not involved. All debt was with ONE lender - All settle or no settle was my motto. I could not bear the idea of having to deal with multiple lenders - way too complex - too many dynamics.

Normal: Our friends - One is out of work on unemployment. They have 1st and 2nd (CC consolidation) and more CC debt. add in Truck payment, boat payment and some toys. They need to be on BK 13 to live on a budget. They need to dump the boat, sell the truck. They need to do a CH 13 to make life manageable and have protection. They would qualify for a lien strip easily. (I really like lien strip idea !!).

I "could" suggest that someone with 20 different debts should go Bk13. A unified settlement offer under 30% would be nearly impossible. Also debt settlement at 50-65% sounds way too high for my tastes. It all comes down to putting pencil to paper and which way makes financial sense and also mental health sense.

I would suggest to all to read through this thread first and some others ( and use the search feature) - The answers you seek have already been answered multiple times. ( How long does it take , how much to settle for, JDB vs OC, )

[scsurfer]

I'm playing this settlement game...I've have 2 unsecured debts (retailer CC's with HSBC) and 1 secured debt (ATV loan with GE Money). About 3-4 months of no payment on all 3, and all 3 still with OC. When I was in good standing and making monthly payments all 3 raised the rates above 20%. I tried calling them numerous times to get the rates lower or get some sort of break, to no avail.

My credit is already trashed from a foreclosure, so I saw an opportunity and decided to take advantage of it. So, I just stopped paying on all 3. I answer the phone once every 3 weeks (it's a dedicated line with an answering machine and no one else uses it) just to check in with them and have some fun while I wait for settlement offers or for it to go to a CA.
So the first settlement offer came via mail from HSBC about a month ago, which was for 30% debt reduction with the balance paid out over 6 months. I ignored it. The next letter came this week for 40% reduction. I called them back told them I could do 60% debt reduction with balance paid over 6 months. "Computer doesn't allow me to even go that low"...the friendly representative on the other end told me, "Oh well have a nice day" I said.

I plan on countering all offers with a low ball offer and see if I ever get any bites. I'm sure they'll go to collections eventually and I'll just continue the game with them. I know I could eventually get sued but I'm just about collections proof, no property of any kind, can't garnish wages in my state, very little cash ever kept in the bank, etc. And since my credit is already in the chitter, I could care less about that aspect.

Follow up

I just settled on the highest unsecured debt card with HSBC for 50% with payoff in 3 monthly payments. I feel good about the amount as this is one of the ones I really wanted to settle on.

Also spoke with the wicked witch from GE Money regarding the ATV loan and she didn't like my offer of 20% payoff settlement, ending the conversation with saying it was going to the repo desk. I'm actually considering doing a voluntary repo, don't use it anymore and it's in such great shape they might be able to get a decent amount at auction. As far as the deficiency that would result after auction, I'm betting they would write it off as I'm pretty much collection proof and the reduced amount would be better when I get the 1099-c.

[jacko]

If your collection proof, why are you paying HSBC? Save your cash.

Follow up

I just settled on the highest unsecured debt card with HSBC for 50% with payoff in 3 monthly payments. I feel good about the amount as this is one of the ones I really wanted to settle on.

Also spoke with the wicked witch from GE Money regarding the ATV loan and she didn't like my offer of 20% payoff settlement, ending the conversation with saying it was going to the repo desk. I'm actually considering doing a voluntary repo, don't use it anymore and it's in such great shape they might be able to get a decent amount at auction. As far as the deficiency that would result after auction, I'm betting they would write it off as I'm pretty much collection proof and the reduced amount would be better when I get the 1099-c.

[scsurfer]

If your collection proof, why are you paying HSBC? Save your cash.

I actually wanted to settle the HSBC, I have much bigger fish to fry that I plan on not paying anything.

[jwmc1]

I have noticed that no two credit will behave the same. Some are very difficult to deal with (CapitalOne and HSBC). These guys won't settle for much less and they sue pretty fast depending on how much you owe. I have had others (B of A and Citi) settle for much less. I am down to a Home Depot account and a Citi account that I need to take care of. The Citi account is large (about $9k), so I am not sure how that will pan out.

[holycrap]

Just wondering if there is any kind of time limit on settlement? How long will the credit card companies wait for there money? What about the tax issue?

We stopped paying our cards back in Sep of 09. We received our first settlement offer in Dec of 09. Since we decided to go the settlement route my wife and i have paid off 4 of the smaller cards that had sent us offers and called a few more that say they are willing to wait a few months to send us offers at a later date.
I have no idea if there is a drop dead date to any of this, but right now they all seem to be interested at ~7 months late.

The tax issue is tied to the amount forgiven. If it exceeds 599.99 on any account the creditor MAY send that information to the IRS and you will then receive a 1099.

[flyinbroke]

Did you get them by phone or by mail? I am riding about the 4 month mark (stopped paying three in November 09, and two 2/10) and am still getting suggestions of DMPs or maybe *slightly* reduced payments but they want way too much information to work with. I did get a we want full payment letter from FIA/BoA yesterday...no settlement offers from anyone.

Citi has a snotty woman named beverly who insists huffily to my VM that "we ARE TRYYYYYING to help you but you NEEEEED to call us TODAY. Time IS RUNNING OUT." Have not called back, just missed second payment with them. But it is kind of a huge balance.

[scsurfer]

So GE Money sent the Repo man to pick up the quad today, I am out of town so it didn't happen. My wife got his info and I called him and set up a date to come pick it up. Now to prepare myself for the post-repo game (ie possible lawsuit) I will have to play with GE Money...

[holycrap]

Did you get them by phone or by mail? I am riding about the 4 month mark (stopped paying three in November 09, and two 2/10) and am still getting suggestions of DMPs or maybe *slightly* reduced payments but they want way too much information to work with. I did get a we want full payment letter from FIA/BoA yesterday...no settlement offers from anyone.

Citi has a snotty woman named beverly who insists huffily to my VM that "we ARE TRYYYYYING to help you but you NEEEEED to call us TODAY. Time IS RUNNING OUT." Have not called back, just missed second payment with them. But it is kind of a huge balance.

I have received them all by mail. A good piece of advice that i got from this forum was to only believe what they are willing to put in print. So far all of the settlement offers have been unsolicited, but as slowly as my wife and i will be making progress we may have to make calls to some of our creditors in the future.

[deepinit]

The taxes could hurt you!

I am more concerned about the tax implications when you settle yourself. I dont think that to many people will end up in a better situation regarding their credit if you settle on your own - I guess it depends on how much debt you have and your situation.
I havent filed yet but am interviewing attorneys and it looks like we're going to do a chap. 13 and do a lien strip on our 2nd and pay for a car and some attorneys fees and be done in 36 months hopefully and not have to worry about the phone ringing or the mountain of debt on my shoulders.
The other issue is you need to have the cash in hand typically to settle with htese guys and even if you get a payment plan on 30 -50% of the debt - some of our cards are 19 - 20k that would be a $2000 payment plan. No thanks!
I think we are going to take our lumps with a 13 - learn our lesson and move on.
Good luck

[jwmc1]

I don't think you can do 36 months unless you are paying 100% of your debt back.

[flyinbroke]

I have received them all by mail. A good piece of advice that i got from this forum was to only believe what they are willing to put in print. So far all of the settlement offers have been unsolicited, but as slowly as my wife and i will be making progress we may have to make calls to some of our creditors in the future.

I have blown off most calls because of their refusal to print up anything. I guess I am not in the settlement zone yet.

[deepinit]

Im not sure on the 36 month 100% plan - I am just going off what my attorney told me - roughly an $80 payment for 36 months? Unless I buy my leased car before I file then it will go up to whatever the loan is for at 5% interest.
I am taking his word for it.